On the Grid

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Employment in the manufacturing sector is rising and Western Pennsylvania is among regions demonstrating rapid growth because of energy-intensive industries, a report for the U.S. Conference of Mayors found.

Energy-intensive manufacturing employment will expand by more than 1 percent per year nationwide, with 72 percent of those jobs in metropolitan areas, the report said, noting that the Marcellus shale play in Pennsylvania and Bakken shale drilling in North Dakota significantly fueled that expansion.

Energy-related manufacturing is credited with boosting the economies of several metropolitan areas, and inexpensive natural gas and unconventional oil plays hold potential for supporting long-term growth, the report said.

Pittsburgh remains a national leader in iron and steel manufacturing jobs, second only to Chicago with 8,145 jobs in 2012. Employment in iron and steel is forecast to contract by 0.9 percent annually in Pittsburgh through 2020.

Sectors showing potential for growth in Pittsburgh include fabricated metals manufacturing, with jobs expected to grow 1.4 percent annually to 16,606 by 2020, and plastics and rubber production, with predicted annual employment expansion of less than 1 percent to 4,727 jobs by 2020.

“Despite a large employment decrease during the recession nationwide, you'll see that the oil and gas industry grew during the 2007-to-2012 period because of the growth in the oil and gas industry, especially in shale gas, and Pennsylvania led that growth,” said Jennifer Cruz, an economist with the Bureau of Labor Statistics.

The Philadelphia Federal Reserve Bank said this week that its business activity index rebounded to 9.0 in March from negative 6.3 in February. Any reading above zero indicates expansion in manufacturing. Total annual average employment in Pennsylvania declined by 1.3 percent between 2007 and 2012 to 5,578,414; by contrast, employment in the oil and natural gas industry increased by 259.3 percent over the period, the Labor Department said last week.

“One advantage is that the companies that supply those manufacturing industries are also going to want to base here, since the business is already established here,” said economist Gus Faucher at PNC Financial Services Group.

Sustaining growth in manufacturing will be a challenge in the long run, Faucher said, as Western Pennsylvania tries to sustain population.

Only five of 22 counties in the tri-state region of Western Pennsylvania and bordering counties in Ohio and West Virginia reported steady growth in population since 2000, according to the Census Bureau. The 27 western rural counties in Pennsylvania declined by 0.9 percent during that decade, and they lost 0.5 percent from 2010 to 2012.

About 8 percent of the region's workers hold manufacturing jobs, according to the Allegheny Conference on Community Development, roughly on par with national averages but down from 25 percent when the sector was No. 1 in the late 1970s.

“That would be the biggest deterrent to those industries — if population losses continue, it will be more difficult to attract those industries,” Faucher said.

Shale-gas development led to a surge in employment in Pennsylvania, a traditional coal-producing state. In 2012, the state was the sixth-largest employer nationwide in the oil and gas sector, up from the 10th largest in 2007, the Labor Department said.

Pennsylvania had the second-biggest employment increase during that period, behind Texas. The average pay in the oil and gas sector in 2012 was $82,974 in Pennsylvania, higher than the state average of $48,297.

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